Tokenization platform Ondo Finance has launched its first stock token product compliant with the U.S. Securities and Exchange Commission (SEC) guidelines for token securities. The product tokenizes shares of BlackRock’s exchange-traded fund (ETF) and Micron Technology, demonstrating that stock tokens can operate within existing U.S. securities regulations.
CoinDesk reported on July 2 that Ondo Finance has introduced a product tokenizing BlackRock’s iShares Core S&P 500 ETF (IVV) and shares of semiconductor giant Micron.
The product will be issued on the Ethereum blockchain. Oasis Pro Transfer Agent (TA), an SEC-registered transfer agent acquired by Ondo Finance last year, will manage the issuance process.
Financial infrastructure firm Broadridge will handle tasks such as voting rights, disclosures, and shareholder notifications. Stock token holders will have the same voting rights and shareholder privileges as investors holding actual shares through traditional brokerages.
Ondo Finance stated that this product launch represents a real-world application of the SEC’s custody-based tokenization model. The company aims to prove that blockchain-based stock tokens can function within the U.S. regulatory framework.
In January, the SEC issued guidance suggesting that third parties could hold physical securities and issue tokens based on them under existing securities laws.
This interpretation implies that intermediaries like brokerages could hold existing shares and issue blockchain-based tokens representing rights to those assets. This approach differs from companies directly tokenizing their own shares.
Ondo Finance will continue to have U.S. custodians hold the actual iShares Core S&P 500 (IVV) exchange-traded fund (ETF) and Micron shares. Oasis Pro TA will issue corresponding tokens on Ethereum at a 1:1 ratio, maintaining the regulatory framework for existing brokerages, transfer agents, and custodians.
Ian De Bode, CEO of Ondo Finance, emphasized that this case demonstrates how tokenized securities can meet both market demands and regulatory requirements for U.S. and international investors.
The market for tokenized stocks is rapidly expanding in both the crypto industry and traditional finance sectors.
U.S. trading platform Robinhood has unveiled its own blockchain and is expanding stock token services beyond Europe, while the Depository Trust & Clearing Corporation (DTCC) is bolstering its blockchain infrastructure. Nasdaq and the New York Stock Exchange (NYSE) are also pursuing tokenization projects to integrate blockchain technology into securities markets.